Fed's Beige Book reveals economy's sluggishness

Highlights from the Federal Reserve's survey of economic conditions nationwide. The survey, released Wednesday and known as the Beige Book, is based on information collected from the Fed's 12 regional bank districts. BOSTON (This region covers Maine, Vermont, Massachusetts, New Hampshire, Rhode Island and part of Connecticut.) Most manufacturers say business was weak, with customers delaying or canceling orders. Biopharmaceutical and health care were bright spots. Most retailers are optimistic they are past the bottom, with a majority of merchants reporting less negative or more positive year-over-year sales. Family restaurants, though, have been hurt. Residential real-estate markets were sluggish, though there were some positive signs. Boston-area home sales fell only 5 percent year-over-year, and New Hampshire home sales were flat in June compared with a year earlier. Commercial real estate weakened further. Many companies continue to cut workers and benefits, if not pay. In a separate Labor Department report Wednesday, the government said the unemployment rate in the metro area of Boston-Cambridge-Quincy rose to 8.3 percent in June, up from 7.5 percent in May. NEW YORK (This region covers New York and parts of Connecticut and New Jersey.) The economy showed some signs of stabilizing, though economic activity may still be contracting. The job market remains weak, with some signs of leveling off. Manufacturers report stable conditions. Retailers reported sales as fairly steady, though down from a year ago. Moderate-priced merchandise sold better than premium lines. Tourism in New York City was sluggish, with Broadway theater attendance down more than 10 percent from a year earlier. Manhattan hotel revenue ran 35 to 40 percent below a year ago. Housing markets showed signs of stabilizing in northern New Jersey and upstate New York but deteriorated in New York City and especially Manhattan. Commercial real-estate activity was steady. Bankers reported a drop in loan demand, particularly from households. Credit standards tightened, and delinquency rates were steady to higher. In the New York-Northern New Jersey-Long Island metro area, the jobless rate rose to 8.8 percent in June, from 8.2 percent in May, the Labor Department said. PHILADELPHIA (This region covers Delaware and parts of Pennsylvania and New Jersey.) Manufacturers reported drops in shipments and new orders, though makers of industrial materials noted slight increases. The outlook among manufacturers, though, is positive, with around one-half expecting orders and shipments to rise over the next six months. Retailers had mixed sales results, with discount stores faring better than other. Retailers expect sales to strengthen slowly. Some fear, though, that consumer caution will extend into the back-to-school shopping season. Car sales were slow. Bank loan volume rose slightly, but credit quality deteriorated. Home sales increased, while commercial real-estate activity was slow. The jobless rate in the metro area of Philadelphia-Camden-Wilmington rose to 8.7 percent in June from 8.2 percent in May, the government said. CLEVELAND (This region covers Ohio and parts of Pennsylvania, West Virginia and Kentucky.) The economy showed signs of leveling off. Factory production stabilized at low levels. Steel makers expect a slight pickup in the third quarter. Most factories, though, foresee more layoffs and pay cuts. Retailers said sales were flat to slightly down, with shoppers focusing on less expensive necessities. New-car sales were weak; sales of used cars were relatively strong. Home building remains slow, though most builders saw a slight increase in sales. Prices rose for lumber, shingles and concrete. Commercial real-estate activity was mixed, with some improvement for contractors taking part in government-funded projects and education projects. In the metro area of Cleveland-Elyria-Mentor, the unemployment rate held steady at 4.7 percent in June, from May. RICHMOND (This region covers Virginia, Maryland, North Carolina, South Carolina and parts of West Virginia, North Carolina and South Carolina.) Retail sales dipped, big-ticket sales "languished" and sales of U.S.-made cars stayed in the "doldrums," while foreign-made autos fared better. Tourism was mixed. Manufacturing activity strengthened. Demand was stronger for clothing, chemicals, food, printing, publishing, rubber and plastics. A chemical maker in South Carolina reported growth in orders from China, India and other East Asian markets. Housing activity was mixed. Real-estate agents in Fairfax, Va., described the heart of the local market as "hot," with houses in $400,000-to-$1.2 million range selling fastest. Agents in Washington, D.C., made similar observations. But agents in North Carolina's Greensboro and Asheville reported sluggish sales. Commercial real-estate activity weakened. The unemployment rate for the metro area of Washington-Arlington-Alexandia rose to 6.6 percent in June, from 6.2 percent in May. ATLANTA (This region covers Georgia, Alabama, Florida, and parts of Louisiana, Mississippi and Tennessee.) Retailers said sales were in line with expectations but down from last year. Tourism spending was sluggish. The contraction in home sales moderated, with more demand at the market's low end. Commercial real-estate activity weakened, pushing up vacancy rates. The contraction in manufacturing slowed. Most noted an improved outlook. Companies think the worst of the layoffs are behind them, but some in the auto, oil and gas businesses plan more job cuts. Farmers, especially those growing citrus crops, benefited from good weather. The Atlanta-Sandy Spring-Marietta metro area saw its jobless rate rise to 10.7 percent in June, from 9.5 percent in May. CHICAGO (This region covers Iowa, Wisconsin, Michigan and parts of Illinois and Indiana.) Consumer spending was sluggish, with households remaining price-conscious and focusing on necessities and holding back on expensive and luxury goods. Retailers braced for a "poor" back-to-school season. Factory activity was weak. The shutdown of several auto plants hurt, but the quick resolution of the Chrysler and General Motors bankruptcies boost business confidence. Steel production rose as some businesses look to replenish shrunken inventories. Home building was slow, especially for apartments and condos. Foreclosed homes pulled down prices. Commercial real-estate contracted. Lower demand for livestock feed contributed to a drop in crop prices. Chicago-Naperville-Joliet's unemployment rate rose to 11 percent in June, from 10.4 percent in May. ST. LOUIS (This region covers Missouri, Arkansas and Kentucky, and parts of Illinois, Indiana, Tennessee and Mississippi.) Manufacturing activity declined at a slower pace. Makers of furniture, fabricated metals, plastic products and paper are among those planning to expand and hire workers. But manufacturers in aerospace, electrical equipment and frozen food plan to cut back and lay off workers. Retailers and auto dealers reported mixed sales. Home sales and home building declined. Commercial real estate struggled. In agriculture, farmers planned to harvest more acres of corn for grain as well as soybeans and rice but fewer acres of sorghum for grain. The jobless rate for the St. Louis metro area rose to 9.9 percent in June, from 9 percent in May. MINNEAPOLIS (This region covers Montana, North Dakota, South Dakota, Minnesota and parts of Wisconsin and Michigan.) Manufacturing activity declined. Oil and gas exploration edged up, while mining activity fell. Retail spending was "constrained." Auto sales picked up slightly. Tourism activity slipped. Residential real-estate increased. Commercial construction was stable at low levels. Agriculture conditions weakened. Potato growers in the Red River Valley could lose 20 percent of their crop from heavy rains, while drought conditions persist in northern Wisconsin. Corn, soybean and wheat prices are expected to fall. In the metro area of Minneapolis-St. Paul-Bloomington, the unemployment rate rose to 8.5 percent in June, from 7.7 percent in May. KANSAS CITY, Mo. (This region covers Wyoming, Nebraska, Colorado, Kansas, Oklahoma and parts of Missouri and New Mexico.) Consumer spending was sluggish, but improvements were noted in auto sales and tourism. Factory activity expanded modestly. Makers of machinery for airplanes and for the oil and gas industries saw sharp contractions. Home sales were stronger. House prices were firm in Kansas and Oklahoma, but foreclosures weighed heavily on the Colorado and New Mexico markets. Commercial real estate weakened further. The energy sector held back the region's economy, with no change in drilling activity. Low natural-gas prices limited activity. In agriculture, growing conditions improved, thanks to ample rainfall. But soft demand for meat put downward pressure on livestock prices. The unemployment rate in the Oklahoma City metro area rose to 6 percent in June, from 5.8 percent in May. DALLAS (This region covers Texas and parts of New Mexico and Louisiana.) Retail sales were mixed. Department stores saw improvements, while "value-based" retailers saw slightly weaker activity. Auto dealers said sales were steady at low levels, and most are hopeful the worst is behind them. Manufacturers of construction-related materials and equipment said demand was flat. High-tech manufacturers boosted production. Home sales improved in the lower-priced market for first-time buyers. Commercial leasing activity softened. Rising oil prices led some companies to boost the number of drilling rigs. In agriculture, drought continued to stress crops, and ranchers in the driest areas are cutting back on their cow and cattle herds at a loss. In the San Antonio metro area, the jobless rate rose to 6.9 percent in June, from 5.8 percent in May. SAN FRANCISCO (This region covers California, Washington, Oregon, Idaho, Nevada, Utah, Arizona, Hawaii and Alaska.) Retail sales were sluggish overall, but there were some signs of stability and improvement. Shoppers focused on necessities like food. Sales of furniture and household appliances was "anemic." Demand for used cars was strong, while sales of new autos were stuck at low levels. Manufacturing remained weak. Makers of fabricated metal products were especially hard hit. Production at airplane factories slowed. But conditions improved for makers of semiconductors and other information-technology products. Housing markets were weak overall, but low mortgage rates and falling prices propelled a pickup in some areas. Commercial real-estate markets weakened. Sales mostly held steady for crop and livestock products. In the metro area of San Francisco-Oakland-Fremont, the unemployment rate rose to 10.3